Ridiculous: Positive Report on NDSU’s Fiscal Health Is Based on Private Foundation’s Money

With North Dakota State University President Dean Bresciani on the bubble in terms of keeping his job his allies and media sycophants are circling the wagons. Their mission is to paint this bureaucratic cancer who has presided over sub-par academic outcomes and served as a belligerent sort of obstacle to creating a unified statewide university system as a paragon of administrative excellent.

One talking point that has been circulating of late is a report from Moody’s (the same rating agency that can’t seem to forecast North Dakota’s revenues accurately) giving the university positive marks for its financial position. NDSU itself pushed out a press release about the report which was dutifully picked up and distributed by the aforementioned allies and sycophants.

Though, notably, nobody seemed to provide an actual copy of the report itself. Just selected quotes from it.

I can provide a copy of the full report below, and it reveals something kind of troubling. NDSU’s strong financial rating is because Moody’s included the finances of the supposedly separate, supposedly private foundations such as the NDSU Development Foundation.

Why would Moody’s, when scrutinizing the finances of a public university, include private foundation dollars in their examination? It’s actually because NDSU President Dean Bresciani pushed through that policy change with a very NDSU-friendly State Board of Higher Education, and a very NDSU friendly Chancellor in Larry Skogen, a few years ago.

It’s called the Composite Financial Indicator, and there were come concerns about its implementation as you can see from these April 16, 2014 meeting minutes of the Administrative Affairs Council which “advises the chancellor and campus presidents on administrative, budget and related financial matters.”

The use of CFI which includes private foundation dollars is now policy.

Which works out well politically for Bresciani who can tout strong fiscal marks that are based, in no small part, on the admittedly strong fundraising for the school’s private foundations, notably the Development Foundation.

But is that good policy? As the concerns above indicate, neither state elected officials nor university employees have any real control over the private foundations. In fact, when the Legislature has attempted to even audit these foundations there has been furious push back (from Bresciani, notably). The argument being that the foundation is separate and private and thus outside the jurisdiction of public policymakers.

Convenient, isn’t it? How foundations are separate and private for the purposes of public audits and accountability, but yet lumped in with the public institutions they serve when it’s politically advantageous?

If we need evidence of how problematic this is, look no further than the Dickinson State University Foundation which went belly-up after some bad investments. The leadership at Dickinson State distanced itself from the foundation’s woes arguing that it was a separate and private entity, but it was the taxpayers who had to step in and bail the foundation out.

Another good example is the UND Research Foundation which made a bad investment in the REAC Building, something which also required a bailout from the Legislature.

The NDSU Development Foundation, among other private organizations which exist to serve the school, is run by a private board. They may try to work in concert with the administration at NDSU, but no public official has direct control over the decisions the foundation makes.

Which is why it’s absolutely ridiculous policy to include these foundations in the finances of the public schools.

A truly honest look at NDSU’s finances would not include private foundation dollars which are a) not under the control of public officials and b) aren’t even transparent to the public.

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